THE DEMOGRAPHIC WINDOW AND ECONOMIC DEPENDENCY RATIO IN THE HONG KONG SAR

Abstract

Hong Kong, like other countries with developed economies, is experiencing significant population ageing. The shift in the population age structure results from a combination of decreasing mortality rates and prolonged low fertility rates. This paper investigates the economic impact of changes in a population's age structure. We forecast on sex-specific labour force participation rates (LFPRs) and the economic dependency ratio (EDR) using different scenarios. Our results show that the below-unity level for the EDR—prevalent since 1996—will exceed unity in 2015 and rise steeply thereafter. By 2036, the projected EDR will reach an unprecedented high of 1.4, where every three economically-inactive persons will be supported by two economically-active persons in Hong Kong. This projection not only reflects a significant age shift towards the older end of the age spectrum, but is also driven by declining LFPRs among men.